Crude oil rallies on growing Iran tensions, Nigeria violence

Forexpros - Crude oil futures added to strong gains on Tuesday, boosted by a combination of mounting fears over a disruption to Iranian oil supplies as well concerns over civil unrest in oil-rich Nigeria, while weakness in the U.S. dollar provided further support.On the New York Mercantile Exchange, light, sweet crude futures for delivery in February traded at USD102.80 a barrel during U.S. morning trade, rallying 1.48%. It earlier rose by as much as 1.95% to trade at USD103.41 a barrel, the highest since January 5. Crude prices added to gains after European Union diplomats said earlier that EU states, which have already agreed in principle to an embargo on Iranian oil imports, are due to hold a meeting to decide on the measure on January 23, instead of the originally scheduled date of January 30. On Monday, the Islamic Republic confirmed that it had started uranium enrichment at the Fordow bunker near the city of Qom, which the U.S. state department called a 'further escalation' of violations of U.N. resolutions.Reports that the United Arab Emirates would delay the launch of a key oil pipeline that bypasses Hormuz to mid-2012 also fuelled concerns about oil supply from the Gulf.The Strait of Hormuz, located between Iran and Oman, is one of the most important oil-shipping channels in the world, handling about 33% of all ocean-borne traded oil, according to the U.S. Energy Information Administration.Meanwhile, the U.S. dollar was weaker against its major counterparts, boosting the appeal of dollar-denominated commodities. The dollar index retreated 0.2% to trade at 81.14. Later in the day, German Chancellor Angela Merkel and International Monetary Fund President Christine Lagarde were to meet in order to discuss Greece's bailout. Markets were also awaiting fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world's largest oil consumer. The American Petroleum Institute will release its inventories report later in the day, while Wednesday's government report could show crude stockpiles rose by 1.0 million barrels last week, while gasoline supplies were forecast to increase by 2.0 million barrels.Elsewhere, on the ICE Futures Exchange, Brent oil futures for February delivery rose 0.65% to trade at USD113.19 a barrel, with the spread between the Brent and crude contracts standing at USD10.39 a barrel.Brent prices remained supported as Nigerian production outages and strikes threaten to reduce supplies of light, sweet crude from the oil-rich country.Nigeria produces approximately 1.9 million barrels of oil per day, making it Africa's largest oil producer, according to the U.S. Energy Information Administration.
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